Chinese New Year passenger travel discouraged in favor of energy supplies – more heavy snowfalls forecast 

February 4th  - China continues to have problems with its worst winter weather for 50 years as further heavy snow hit already stressed cities and towns in much of the country. With the military already deployed and tanks on the roads in some areas to assist with snow and debris clearance, power shortages threaten anew as raw materials such as coal and coke have been delayed in getting to power plants. Rail rolling stock has been diverted away from the normal passenger transit duties as this time of year, with Chinese New Year’s eve just 36 hours away, in order to allow reasonable chances of the power supply being maintained. Up to 60% of all passengers are now expected to stay put rather than travel back to their homes, effectively missing Chinese New Year celebrations with their families. A record number of over 42,000 rail container trucks laden with coal and coke were transported just today (Monday) alone to ensure national power supplies could be maintained – over 25% more than the norm at this time of year. Both army and civilian maintenance crews were also working around the clock to repair broken or damaged power lines in Guangdong, Guizhou and Henan Provinces, where millions of people have been without power for over a week.

Several energy intensive metal producing plants have also been ordered to shut down to conserve fuel, with the aluminum and steel industries worst hit, a situation reflected in the world’s trading bourse, the London Metal Exchange, where futures contracts have shown sharp increases in value and the daily trading rate have shot up by more than 10% in the past few days for these commodities as shortages loom. The supply chain knock-on effect has also led to several auto manufacturers in China to either close or reduce capacity as sheet metals are not reaching their production lines. Nissan, Honda, Toyota, Ford and Mazda have all closed some or all of their plants.   (more…)

By Andy Scott

SHANGHAI, Jan. 29 - The biggest winter storm to hit many parts of eastern China in 50 years brought down buildings, closed train stations and left millions stranded throughout the country just days ahead of the biggest holiday season.

One day after the storm killed at least a dozen people and brought much of central and eastern China to a halt; it continues to wreak havoc on the country’s road, rail and airport networks. Most flights out of Hongqiao Airport were delayed or canceled for a second straight day, while traffic slowly returned to the region’s rail and roadways. Trains out of Shanghai continued to see major delays of up to 10 hours today and travelers found themselves having to make the best of a bad situation, often transferring tickets and taking round-about routes to reach destinations in the Yangtze River Delta. (more…)

SHANGHAI, Jan 24 - Shanghai’s Urban Transportation Administration Bureau has announced that any representative office established in Shanghai before January 7, 2007 has until February 5, 2007 to apply for a vehicle license plate free of charge.

In the past, every representative office in Shanghai was entitled to one vehicle license plate. However, early this year, the Shanghai government changed that policy and it was determined that any representative office established after January 7 would have to pay to obtain a vehicle license.

The administration built in the one-month grace period so that representative offices established before January 7 could still apply for a vehicle license plate without paying the license plate fee.

Shanghai limits the number of cars in the city by limiting the number of license plates it issues every year. In order to obtain a license plate, vehicle owners must buy them at auction, with plates usually selling for around RMB23,000.

SHANGHAI, Dec. 11 - Chongming Island, China’s third-largest island and designated for ecotourism development, looks likely to become the site of a new Disneyland after 2010.

The island, situated north of Shanghai, will likely get a Disney theme park following the 2010 World Expo a government spokesman for the island said yesterday.

“We have made plenty of efforts to have a Disney theme park. No decision has been made so far. We will make announcements when we know the result. A Disney theme park will probably be built in Shanghai after the World Expo,” the spokesman said.

As the project is a significant one, it will need approval from Beijing before it can proceed. However, links to the island are scheduled to improve once a bridge and tunnel linking Chongming to the Shanghai are completed in time for the World Expo and Beijing will likely move ahead with the project. (more…)

SHANGHAI, Nov. 27 - Express shipping and logistics giant, DHL has signed a deal to invest US$175 million on a North Asia hub to be located at Shanghai Pudong International Airport. The move aims to increase the company’s Asia Pacific scope and cement its market leadership in China.

This is the second cargo brand to invest in the airport, after UPS announced plans to build its own 96,000 square meter hub by next year, making it the first in the world to be equipped with two international cargo hubs.

Daniel McHugh, chief executive officer of DHL Express Asia Pacific, told Cargonews Asia that the announcement, “underlines DHL’s strong commitment and confidence in the Shanghai government’s vision of establishing the city as a world economic center, as well as the Shanghai Airport Group’s objective of building Pudong International Airport as the international air hub of choice.”

“Our task as a global logistic provider is to network the world. We are confident that the new hub will give us an even greater competitive edge in managing the huge and complex global trade that is being routed to this region,” he added.

The North Asia hub is scheduled to be operational by the second half of 2010 and will be located nearby the airport’s soon-to-be-completed third runway. It will join the ranks of the company’s five other hubs serving the region: Hong Kong, Bangkok, Incheon, Singapore and Sydney. (more…)

SHANGHAI, Oct. 10 - The central government has given the Beijing-Shanghai high-speed railway the green light according to a notice posted on the National Development and Reform Commission’s website Tuesday.

With a speed of up to 350 kilometers per hour, the high-speed train would shorten rail travel times between Beijing and Shanghai from the current 10 hours to less than five.

The project, which has been on the drawing board for more than a decade with work expected to begin last year, was to be operational by 2010 before construction was postponed. The cost of the project, with initial estimates ranging from RMB130 billion to RMB170 billion, could exceed RMB200 billion due to rising real estate prices and the cost of resettling people who live along the proposed path.

The 1,318 kilometer rail project has attracted the attention of France’s Alstom, Canada’s Bombardier, Japan’s Kawasaki Heavy Industries and Germany’s Siemens, all vying to provide technology. It’s expected that high-speed wheel technology, like that used in Europe, Korea and Japan, will be employed over more the costly magnetic levitation that currently is only used on a tester extension in Shanghai. (more…)

By Cathy Gao/Dezan Shira & Associates

SHANGHAI, Sept. 26 - Currently in China, labor contracts are regulated by the Labor law of the PRC and over 25 separate employment contract regulations by individual provinces and cities. These current regulations and rules are now being challenged by the recently passed Contract Labor, set to take effect January 1, 2008. Here we look at the differences between the labor regulations already on the books in Shanghai and the new law.

Written contract
Under Shanghai’s rules, all individual employment contracts must be concluded by written contract for each employee. The Contract Labor law strengthens this position by entitling employees who are not given a written contract within the legal term limit double wages per month to an open-term contract.

Less flexibility for the employer
Compared to Shanghai’s rules, the national law shortens the maximum allowable probation period for new employees, reducing flexibility for employers during the probationary period. However, during this period, employers have more flexibility in terminating their relationship with the employee. (more…)

By Helen Ye/Dezan Shira & Associates 

HANGZHOU, Sept. 26 - We have been seeing a lot of variations locally on how the individual income tax (IIT) regime has been administered for expatriates, and Hangzhou, just west of Shanghai, is a perfect example of this.

Previously in Hangzhou, it was permissible to have an agent, not related to the individual’s employment, report the individual’s monthly IIT filings to the local tax bureau. This allowed an expatriate to “hide” the complete make-up of his salary from his companies local payroll officer should he want to.

However, beginning in the month of October, monthly IIT filings will not be able to be handled by third parties and must instead be handled by the expatriate’s payroll department.

This is just on of a raft of changes that we have seen taking place locally throughout China concerning IIT. For more information on changes taking place in Shenzhen, Dongguan, and other places in the country, please see the relevant regional pages of this site.

For business advisory services, assistance establishing, structuring or operating a business and contract drafting in Hangzhou, please contact Helen Ye in the Hangzhou office of Dezan Shira & Associates, tel. [571] 5685 9956.

Textile manufacturers in and around Hangzhou, long one of the region’s pillar industries, are beginning to move their operations inland as China reduces the VAT burden in the central provinces.

Beginning July 1, 2007, the Ministry of Finance and the State Administration of Taxation reduced the VAT burden in eight sectors within 26 specified industrial cities in the six central provinces of Anhui, Henan, Hubei, Hunan, Jiangxi, and Shanxi.

The new system, which applies to both domestic and foreign invested enterprises in the central provinces, benefits general taxpayers engaged in the equipment manufacturing, petrochemical, metallurgy, automobile manufacturing, agricultural product processing, mining, electrical power, and high/new technology sectors within the 26 specific industrial cities.

The input tax can be deducted upon activities listed below:

• purchase of fixed assets (including fixed assets obtained as donation and capital injection)
• goods purchased or services obtained for self-produced fixed assets
• fixed assets obtained by financial lease and the lessor paid VAT as per the relevant tax regulation (Guoshuihan [2000]514)
• transport costs paid for fixed assets (more…)

Earlier this year, a new policy of conducting an on-sight tax inspection for any new representative office (RO) or wholly foreign owned enterprise (WFOE) has come into practice in Shanghai.

Under this current practice, the tax inspection on the office premises will have to be conducted before tax registration can begin. Because the tax officer will normally alert the RO/WFOE only one day in advance of the inspection, most companies will find that they have little time to prepare. Therefore, we think it necessary for companies to understand the relevant requirements in advance.

Generally, the following matters should be prepared:

• original leasing agreement
• original formal leasing invoice
• original business license (WFOE) or registration certificate (RO)
• company logo/signage for building lobby, floor of office, and office suite entrance
• basic office funishings, such as desks, tables, chairs (more…)